South Korean automaker Hyundai Motor reported its 13th straight quarter of rising profits on Thursday, boosted by standout sales in Europe that offset a sluggish performance in its home market and China.
Hyundai Motor, the world's fifth-biggest carmaker along with affiliate Kia Motors , posted double-digit sales growth in Europe as other mass market automakers floundered. Ford Motor
Hyundai Motor net profits rose to 2.55 trillion Korean won for April to June, broadly in line with an average forecast among 14 analysts of 2.52 trillion won. It marked a rise of 10 percent over a year earlier.
Shares in Hyundai picked up after the results to stand 2.3 percent higher on the day, outperforming the wider market , which was up 0.9 percent.
Since the second quarter of 2009, Hyundai Motor net profits have risen each quarter compared with the year earlier, as the company led by founding family member Chung Mong-koo outperformed its global peers with stylish, yet affordable cars, helped by a weaker won against the dollar.
South Korea's free trade deal with Europe, which took effect a year ago, also raised the competitiveness of Korean-made vehicles exported to Europe.
But the deal sparked some backlash from European carmakers that suffer from overcapacity and weak demand stemming from Europe's debt crisis. In a bid to support its ailing car sector, the French government has said it would formally ask Brussels to monitor South Korean car imports with a view to taking trade action.
In contrast, the trade deal is hurting Hyundai in its home market, South Korea, as premium brands such as BMW
South Korea was Hyundai's second-biggest market after China last year, and a lucrative revenue source which has supported its growth overseas, analysts said.
Still, Hyundai's profit rise of 10 percent was the slowest pace of quarterly profit growth in more than three years.
The slowdown underlines the challenges facing the stellar performer - meeting lofty investor expectations after years of dizzying growth.
Indeed, Hyundai shares have fallen about 18 percent since May highs on concerns about the global downturn and labour tensions over an annual wage deal.
"Hyundai is selling cars all over the world, so it can't avoid a global demand slowdown. Hyundai's models are also ageing, while competitors are launching new models," Kim Young-min, a fund manger at IBK Asset Management, said before the results were announced.
CHINA STUTTERS
Other rivals, such as General Motors
It has lagged rivals in growing its China market in the last couple of years, partly because of capacity constraints in meeting demand.
It had posted the biggest gains in China market share among top automakers for the past decade. China is now Hyundai's biggest market, accounting for nearly 20 percent of its global sales in 2011.
Hyundai said this week that preliminary figures showed its China sales rose 2 percent to 184,748 vehicles in April to June from a year earlier.
In Europe, Hyundai's sales jumped 18 percent, more than double its global sales growth pace of 7 percent. New passenger car registrations in the European Union fell 6 percent in the second quarter from a year earlier, industry body ACEA said.
Overall auto sales in China grew just 2.9 percent in the first half of 2012 after posting anaemic growth of 2.5 percent in 2011, setting the country up for its slowest back-to-back years of growth since the market took off in the late 1990s.
Many analysts expect the Chinese auto market to pick up in the latter half of this year, but much will depend on the impact of the euro area debt crisis on the global economy.
Hyundai starts production this quarter at a new plant -- its third in China -- which will help it overcome some capacity constraints.
(Additional report by Eunhye Shin in SEOUL and Norihiko Shirouzu in BEIJING; Editing by Neil Fullick)
